Audit shows lack of business administrator is a problem

HILLSIDE — Last week the state comptroller released an audit evaluating the personnel and financial practices of three municipalities in the state and Hillside was one of those towns. However, the township did not fare well when it came to several issues.

Specifically, the audit found Hillside awarded its employees significant longevity payments that were not based on performance, was breaking the law by not hiring a business administrator, and paid crossing guards unemployment benefits when they were actually working.

Acting comptroller Marc Larkins said this was the result of a lack of review on the part of the township.
Larkins said this occurred because of “Hillside’s failure to hire a business administrator, which violates state statute and results in organizational weaknesses.”

Hillside, though, has never had a business administrator since it changed its form of government in 1997 to a mayor-council form, which Larkins said “may result in a lack of oversight and enforcement of township polices.” The acting comptroller strongly suggested the township hire a business administrator immediately.

The township actually hired Rahway Mayor Samson Steinman as a part-time interim business administrator in February, but there have been issues surrounding the finalizing of the contract that would bring him aboard permanently.

Specifically, according to Hillside Council President Donald DeAugustine, the hiring of Steinman was agreed upon by both the mayor and council when he was appointed in February, with details of his contract to be hammered out later. But a few months after that, for unknown reasons, the council president said Mayor Angela Garretson refused to appoint Steinman to the position.

“Our business administrator is actually the mayor of Rahway,” said DeAugstine, adding “you would think him being a mayor would be an asset to achieve things in our town.”

According to the council president, the township clerk kept bringing Steinman’s contract to the mayor to sign but she eventually stopped.

“She kept finding different things she didn’t like, so after five or six times she stopped bringing it to her,” DeAugstine said.
When asked if the mayor simply refused to sign the contract and if the situation was that simple, the council president did not hesitate to say “yes.” But, as to why the mayor refuses, DeAugustine was emphatic in his response.
“That’s a good question,” he said, adding “I don’t know.”

When asked about the business administrator, Garretson declined to comment in detail, saying she would prefer to address the issue in the near future, as plans are in the works.

“Mr. Steinman came around February,” the mayor said, mentioning that he was then out for about four to six weeks for an undisclosed reason. “During that time there were projects that we were able to redirect and we decided that it is in our best interest to go in different directions.”

Garretson wanted to put off discussing the issue in detail for now, but did say she intends to look into hiring a different business administrator. She did not, however, mention why this change in direction has been ongoing for most of the year. Instead, she said her goal is to move forward into the New Year looking to accomplish more for the residents of Hillside.
The objective of the state performance audit, Larkins said, was also to evaluate controls over selected personnel and fiscal practices taking place from Jan. 1, 2010 to Dec. 8, 2014.

In order to do a thorough job, the state interviewed relevant municipal employees, reviewed collective bargaining agreements, employment contracts, municipal ordinances, policies and procedures and payroll and benefit payments.

The state also reviewed annual debt statements, bond ordinances and spending activities, which revealed “excessive costs and other areas of concern” in Hillside.

For example, in the area of employee salaries and compensation, Hillside showed they paid out significant non-performance based longevity payments that individually exceeded $152,000. Larkins said this “all contributed to the financial burdens being placed on local taxpayers.”

For instance, in 2011 alone, Hillside paid out $1.1 million longevity payments to retiring employees. Longevity payments are based on paying retiring employees a certain amount of money for each year they worked for the municipality. The acting comptroller noted that in 2011, both the Hillside police chief and fire chief each received longevity payments of more than $25,000.

The comptroller also reviewed severance payments, which in Hillside totaled $1.3 million in 2011. Severance payments include compensatory time, unused vacation and sick time over the course of employment, and terminal leave pay based on length of service.

Of the 30 Hillside employees receiving severance payouts, 15 employees in 2011 exceeded $50,000 and one employee received a severance payment of $152,305.

Of the $1.3 million in payouts, nearly $300,000 was attributed to accumulated compensatory time, or time employees worked beyond their normal scheduled work day without receiving pay.
Regional Editor Patrick Bober contributed to this story.